The fact that you're using a debit card does make me feel better, but I'm still confused about a few points. Most people who have a budget categorize stuff into specific costs: housing, car, utilities, groceries, etc. Nobody I know categorizes costs by source: local store, online store, etc. Wouldn't it make more sense to categorize the traditional way? That way, you'll know if you've overspent on something and can make adjustments elsewhere. Your way, you'll know you've overspent because you run out of money, but you still won't know why unless you do more work to figure out what you spent it on.
I have the specific cost budgets. I set back 100 per paycheck for gas, my utilities are budgeted for the highest amount I have seen, housing improvements come out of my savings/projects fund, and groceries/misc has a 100 a paycheck budget. However there are some items that I can only find online. This is where the new budget category comes into play. Sometimes that Item may be an American made can opener, sometimes it may be spices for cooking, sometimes it may be ceramic filters to treat water, sometimes it may be fish related supplies (until I can get my fish tanks sold), sometimes it may be books or movies since I shut off the cable and blockbuster my mail years ago, or like the order I placed last night for computer parts.
Point is... these purchases are going to be made online and while they fall into multiple categories it is much easier to just set up one budget fund to cover them all. Especially since all the local stores are getting paid in cash. This keeps me from having to keeping going back to the bank to deposit money that I already took out.
I tried to just budget for expenses on paper and leave all my money in the bank. I failed horribly at that. I was constantly overdrawing the budgets when I went to walmart. That's why I now pull out XXX per paycheck for expenses. If I have to whip out the debt card... then I have to think if this is something I want to dip into the savings for.
While this way may not tell me exactly what I over spent on... it should keep me from overspending because now I have $xxx I can spend in online purchases and if what I want costs more I know I either have to save more in that fund or make a conscious decision of pulling money from somewhere else to cover the expense.
Case in point... last night I ordered a 1tb secondary hard drive for my laptop. Once it comes in I'll move all my photography and documents from my desktop over to the laptop. (I don't like having these files on the same hd as the operating system). Then I'll clean up my desktop computer and sell it. I had to make a conscious decision to pull money out of savings/projects to make this purchase because I didn't have my "online purchases" budget funded. This will also allow me to be able to show off my work more effectively to potential clients. I'll have my photography there with me when we are discussing what they are after in a photography session.